TMI Blog2011 (8) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings afresh from the stage of issuance of notice under Section 143 (2) of the Act. In these circumstances, it would be incumbent upon the AO to first substitute the name of the appellant in place of M/s Spice and then issue notice to the appellant. However, such a course of action can be taken by the AO only if it is still permissible as per law and has not become time barred. - ITA 475 OF 2011 & ITA 476 OF 2011 - - - Dated:- 3-8-2011 - MR. JUSTICE A.K. SIKRI, MR. JUSTICE M.L. MEHTA, JJ. For Appellant: Mr.Ajay Vohra, Advocate with Ms.Kavita Jha and Mr.Somnath Shukla, Advocates. For Respondent: Mr. Sanjeev Rajpal, Advocate. A.K. SIKRI, J. 1. The relevant facts giving rise to the filing of these appeals, which touch upon the questions of law raised, are as follows:- For the previous year relevant to the assessment year 2002-03, Spice Corp Ltd. (hereinafter referred to as the amalgamating company) filed its return of income on 30th October, 2002 declaring NIL‟ income. Subsequently, vide order dated 11th February, 2004, passed by this Court, the said company stood amalgamated with M/s MCorp Private Limited (hereinafter referred to as the ama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the amalgamated company had preferred an appeal to CIT (A) against the assessment order. The Tribunal has accordingly remanded the file back to the Assessing Officer for framing afresh assessment in the name of the present appellant on the ground that framing of the assessment in the name of Spice Corp Ltd was a mere technical error. 3. In this backdrop, the question that arises for consideration is as to whether the assessment in the name of a company which had been amalgamated and had been dissolved with the said amalgamating company will be null and void or whether framing of assessment in the name of such a company is a mere procedural defect which can be cured. The appeals were, thus, finally admitted and heard on the following questions of law:- (i) Whether on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the action of the Assessing Officer in framing assessment in the name of Spice Corp Ltd , after the said entity stood dissolved consequent upon its amalgamation with Mcorp Private Limited w.e.f 01.07.2003, was a mere procedural defect ? (ii) whether on the facts and in the circumstances of the case, the Tribunal erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any is not shown. 6. On the aforesaid reasoning and analysis, the Tribunal summed up the position in para 14 of its order which reads as under:- In the light of the discussions made above, we, therefore, hold that the assessment made by the AO, in substance and effect, is not against the non-existent amalgamating company. However, we do agree with the proposition or ration decided in the various cases relied upon by the learned counsel for the assessee that the assessment made against non-existent person would be invalid and liable to be struck down. But, in the present case, we find that the assessment, in substance and effect, has been made against amalgamated company in respect of assessment of income of amalgamating company for the period prior to amalgamation and mere omission to mention the name of amalgamated company alongwith the name of amalgamating company in the body of assessment against the item name of the assessee is not fatal to the validity of assessment but is a procedural defect covered by Section 292B of the Act. We hold accordingly. 7. The aforesaid line of reasoning adopted by the Tribunal is clearly blemished with legal loopholes and is contrary t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Saraswati Industrial Syndicate Ltd. undertook to meet any liability of the Indian Sugar Company which that Company incurred or it could incur, any liaiblity, before the dissolution or not thereafter. Generally, where only one Company is involved in change and the rights of the share holders and creditors are varied, it amounts to reconstruction or reorganisation or scheme of arrangement. In amalgamation two or more companies are fused into one by merger or by taking over by another. Reconstruction or amalgamation has no precise legal meaning. The amalgamation is a blending of two or more existing undertakings into one undertaking, the share holders of each blending Company become substantially the share holders in the Company which is to carry on the blended undertakings. There may be amalgamation either by the transfer of two or more undertakings to a new Company, or by the transfer of one or more undertakings to an existing Company. Strictly amalgamation does not cover the mere acquisition by a Company of the share capital of other Company which remains in existence and continues its undertaking but the context in which the term is used may show that it is intended to inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act. Section 292B of the Act reads as under:- 292B. No return of income assessment, notice, summons or other proceedings furnished or made or issue or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reasons of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceedings is in substance and effect in conformity with or according to the intent and purpose of this Act. 13. The Punjab Haryana High Court stated the effect of this provision in CIT Vs. Norton Motors, 275 ITR 595 in the following manner:- A reading of the above reproduced provision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the appellant on the basis of Section 292B of the 1961 Act. The return under reference, which had been taken into consideration by the Revenue, was an absolutely invalid return as it had a glaring inherent defect which could not be cured in spite of the deeming effect of Section 292B of the 1961 Act. 15. Likewise, in the case of Sri Nath Suresh Chand Ram Naresh Vs. CIT (2006) 280 ITR 396, the Allahabad High Court held that the issue of notice under Section 148 of the Income Tax Act is a condition precedent to the validity of any assessment order to be passed under section 147 of the Act and when such a notice is not issued and assessment made, such a defect cannot be treated as cured under Section 292B of the Act. The Court observed that this provisions condones the invalidity which arises merely by mistake, defect or omission in a notice, if in substance and effect it is in conformity with or according to the intent and purpose of this Act. Since no valid notice was served on the assessee to reassess the income, all the consequent proceedings were null and void and it was not a case of irregularity. Therefore, Section 292B of the Act had no application. 16. When we apply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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